Delay Social Security Benefits to Age 70?
If you are about to turn 70, congratulations on reaching a big milestone. And if your strategy has been to delay Social Security retirement benefits up until now, you are joining a select group — only 6.5 percent of Social Security recipients put off collecting their benefits until they reach 70, the age at which they can collect the maximum benefit. If you are about to join this elite group, it’s important to know when and how to claim.
The Value of Delaying Social Security
The decision of when to claim Social Security benefits depends on a number of factors. Two key factors are (1) income sources in retirement and (2) projected longevity. But Social Security experts advise waiting as long as possible to start collecting benefits, up to age 70. This is because you amass “delayed retirement credits” when you delay taking retirement beyond your full retirement age (66 for those born from 1943 to 1954). These credits increase your benefit by 8% for every year that you wait. The 8% would be over and above annual inflation adjustments. Your checks will be about 76% higher when compared to benefits if you claimed at age 62, the earliest you can file. It’s tough to find a better and more reliable investment than that.
Collecting on Spouse’s Work Record
If you are collecting benefits based on the work record of a current or ex-spouse, there is no point in waiting until 70. You won’t accrue delayed retirement credits beyond your full retirement age.
Could I Delay Social Security Past Age 70?
Delayed retirement credits stop at age 70, so there is no advantage to putting off starting benefits any longer. And if you wait longer than half a year to start claiming, you will begin losing monthly benefits you would have otherwise received. The Social Security Administration (SSA) will pay you retroactively for benefits accrued up to six months after your 70th birthday, but that’s it. If you wait any longer, benefits you would have received are permanently forfeited.
Your First Social Security Check
The next thing to know is that the SSA won’t automatically start sending you checks once you turn 70. You need to apply for benefits. You can do this starting four months before the date that you want your benefits to begin. To get the maximum amount, you’ll want the benefits to start the month you turn 70. There is, however, one scenario where benefits will automatically kick in at 70: those who took benefits after reaching their full retirement age and then suspended their benefits to earn delayed credits until age 70. For them, the SSA should automatically restart benefits at 70.
You can apply online — click here. If you can’t submit your application online, you can call 1-800-772-1213 (TTY 1-800-325-0778).
The SSA issues checks one month behind, so your benefits should start arriving the month after the month you turned 70. For example, if you were born July 17, you should ask that your benefits start in July and your first check will come in August. However, those born on the first day of the month get a small bonus: the SSA treats them as if they were born the previous month and starts paying benefits in their birth month. So, for example, if you were born July 1, you would request benefits to start in June and the payments would begin in July.
Working and Collecting Social Security
Working past age 70, or any time past your full retirement age, won’t affect your benefits. While you won’t increase your monthly benefit by waiting past age 70 to claim, you could benefit by working in addition to collecting Social Security. SSA recalculates your benefits each December based on your 35 highest-earning years of work. If your earnings plus your Social Security benefits allow you to replace a lower-earning year, your overall benefit could increase in the annual calculation. Remember that Social Security benefits arse taxable, so if you’re earning more money your tax rate may be higher.
Social Security and Medicare Premiums
In most cases, your Medicare premiums will be deducted from your Social Security check. If you happen to be retiring at age 70 and you’ve been paying Medicare’s high-earner surcharges, keep in mind that you can reverse these surcharges if your income drops far enough. The Social Security Administration uses income reported two years ago to determine a beneficiary’s premiums. If your income decreases significantly due to certain circumstances, including retirement, you can request that the SSA recalculate your benefits and your premium surcharges could be eliminated or reduced.
Estate Planning and Social Security
Social Security benefits are an integral part of estate planning when evaluating your income sources, tax brackets, family benefits, and a long-term health care plan. Contact Baker Law Group for a free initial consultation for Estate Planning or Elder Law. We would appreciate the opportunity to speak with you. To schedule a consultation:
781-996-5656 phone or